Investor Presentation November 2015
Forward looking statements Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. All statements, other than statements of historical facts, that address activities, events or developments that the Company expects, projects, believes or anticipates will or may occur in the future, including, without limitation, the delivery of vessels, the outlook for tanker shipping rates, general industry conditions future operating results of the Company’s vessels, capital expenditures, expansion and growth opportunities, bank borrowings, financing activities and other such matters, are forward-looking statements. Although the Company believes that its expectations stated in this presentation are based on reasonable assumptions, actual results may differ from those projected in the forward-looking statements. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their obligations to us, the strength of the world economies and currencies, general market conditions, including changes in tanker vessel charter hire rates and vessel values, changes in demand for tankers, changes in our vessel operating expenses, including dry-docking, crewing and insurance costs, or actions taken by regulatory authorities, ability of customers of our pools to perform their obligations under charter contracts on a timely basis, potential liability from future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists. We undertake no obligation to publicly update or revise any forward- looking statement contained in this presentation, whether as a result of new information, future events or otherwise, except as required by law. In light of the risks, uncertainties and assumptions, the forward looking events discussed in this presentation might not occur, and our actual results could differ materially from those anticipated in these forward-looking statements. 1
Euronav – Largest quoted tanker company in world • Additional increase to order book over summer driven by Tier III legislation • Agencies consensus forecast 1.5m bpd • Order book moderate at 17% VLCC & growth 2015 & 1.3m bpd 2016; base 18% Suezmax fleet - natural fleet case of 1m bpd 2017-2020 rejuvenation = 15% order book or 3 years • Lower oil price has stimulated demand Demand Vessel • Financing of new builds much reduced • Demand non-OECD > OECD for Oil Supply since 2009 – no private equity for 15 • Base demand 1m bpd = 30-40 VLCCs months Financing of ships • OPEC strategy for market share seeing increasing output Supply Ton • New trading lanes established past 2 yrs • Potential for Iran to return to production of Oil miles • USA shale reducing need for imports at pre-sanction levels = 1m bpd pushing Atlantic to be “long” oil • USA shale output largely intact since oil • China and India diversifying suppliers price fall • China continues to fill SPR • Russia, Kuwait, North Sea, West Africa - all at record output Current Fleet – Total 54 Vessels 28 VLCC 23 SUEZMAX 1 V-PLUS 2 FSO 125,000 – 180,000 DWT + 3 (TBD) Over 441,000 DWT Stripped water capacity Up to 320,000 DWT Only 4 in world fleet 380k barrels 2 Million barrels 1 Million barrels 3 Million barrels 2.8 Million barrels Average age 6 years Average age 10 years Average age 12 years Average age 12 years 2
Demand – robust outlook from refinery expansion & low oil price Demand for Oil has ALWAYS been robust Refinery Throughputs and Tanker Earnings Only 2 negative growth years since 1990 Source: Citi Demand consistently upgraded during 2015 Refinery expansion in Asia & Middle East key driver Oil @ $60 2017 + Source: EIA 3
Demand – 1m bpd = demand for 30-40 VLCCs pa 648 VLCCs Global Fleet 30 = 4.6% 40 = 6.2% 1m bpd of additional exports x 365 days = 365m barrels Source: Morgan Stanley 365m barrels / 2m barrel capacity per VLCC = 180 cargoes 180 cargoes / 4.5 average no of journeys pa for VLCC (Atlantic – Far East) = 40 VLCCs 4
Supply – VLCC Order book – growing but moderate Source: Clarksons 5
Supply – Suezmax Order book – more of a 2017 story Source: Clarksons 6
Vessel Supply – manageable: financing now a barrier to entry IMPORTANT - New era of financing is restrictive Order book is back end loaded 25 Bank Debt as % of Total Shipping Finance 20 90 19 20 85 16 15 80 15 26% 12 75 down 10 10 10 VLCC 9 9 10 8 70 Suezmax 84% 65 4 4 4 4 4 5 60 1 1 62% 55 0 50 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2014 Source: Clarksons 2015 2016 2016 2016 2016 2017 2017 2017 2017 Source: Clarksons Hamburg Marine Money *up to Nov 2014 Order book as % of fleet – manageable Age profile of VLCC fleet – scrapping rates to rise 2018+ Source: Clarksons Source: Clarksons 7
3 - Supply of Oil = more cargoes = more demand for shipping Oil supply growth HUGE +6.6m bpd past two years Supply outlook – Robust: hard to see output cuts Output m bpd 2013 2014 2015 2016 Comment North America 17.2 18.9 19.7 19.5 Shale growth likely negative but small % FSU 13.8 13.9 13.9 13.7 Rouble weakness & demand for $ driving output; Q3 15 record Saudi Arabia 9.6 9.7 10.2 10.4 continues to ramp up production China 4.2 4.2 4.3 4.2 static output Iraq 3.1 3.3 3.8 4 record production in Q3 2015 Iran 2.7 2.8 2.8 2.9 was producing 4m bpd pre sanctions Venezuela 2.5 2.5 2.4 2.5 output constant despite economic problems Source: Energy Intelligence Nigeria 2 1.9 1.8 1.8 static output Libya 0.9 0.5 0.4 0.5 potential return to 1m bpd? Source: ABG Sundal Collier Increase of global crude output not just a phenomenon of USA shale expansion Russia, Iraq, Kuwait, and Saudi Arabia all hit record production at some point in 2015 OPEC importance is arguably diluted given diversity of oil supply and difficult to see where cuts of sufficient magnitude will come from….and Iran to re -enter the market in 2016 8
China – solid demand: structural support from SPR & reforms Base effect: China imports 7m bpd China imports diversification continues Russia, 14% Libya, 1% Others, 20% Source: Energy Intelligence Kazakhstan, 1% Saudi Arabia, Brazil, 3% 7m bpd = 30.1 metric ton 14% Kuwait, 4% Venezuela, 6% Oman , 11% Iran, 6% Angola, 10% Source: China General Iraq, 9% Administration China Oil demand – always been steady not spectacular Two drivers underpin growth – SPR & “teapot” reform* China 2004 2005 2006 2007 2008 2009 Oil Demand (mbpd) 6.5 6.7 7.2 7.6 7.8 7.9 YoY growth (mbpd) 0.9 0.2 0.5 0.4 0.2 0.2 YoY growth % 16.1% 3.1% 7.5% 5.6% 2.3% 1.9% GDP growth % 8.8% 12.4% 12.5% 13.9% 7.1% 11.7% 2010 2011 2012 2013 2014 2015e China Oil Demand (mbpd) 9.0 9.4 9.8 10.1 10.6 10.9 YoY growth (mbpd) 1.1 0.4 0.4 0.3 0.4 0.3 YoY growth % 13.6% 4.2% 4.3% 3.5% 4.3% 3.0% GDP growth % 10.0% 8.7% 8.0% 7.6% 7.2% 6.8% *Teapot refinery licences = 984k bpd (source: Arctic 28.10.15) Source: China Customs – ratio is 4m tons = 1m bpd Source: Bloomberg 9
What does it all mean? Freight rates will remain volatile as they are set on a daily basis via an auction Source: Clarksons 10
What does it all mean? Rates are seasonal as well 11
Potential for Powerful Cash Generation Euronav is well positioned for strong cash flow generation ■ Breakeven (including debt service): ~$27,000 for VLCC - opex $8,000 ~$22,000 for Suezmax - opex $7,400 ■ FSOs generate a consistent, high quality income stream – $52mm of EBITDA ■ Dividend policy – to distribute at least 80% of net income (P&L definition) Pro forma fleet earnings capability (EBITDA, $M) 1 Next 12 months spot days exposure = 14,341 days $1,092 Each $5,000 uplift in both VLCC and $650 $493 Suezmax rates $339 $264 improves net revenue and +$5,000 +$15,000 +$25,000 +$55,000 EBITDA by $72mm per day per day per day per day VLCC TCE rates $25,000 $30,000 $40,000 $50,000 $80,000 Suezmax TCE rates $20,000 $25,000 $35,000 $45,000 $75,000 1 Based on full year contribution of 57 ships on proportionate basis 12
Company overview
Chartering strategy – opportunistic rather than strategic Chartering strategy seeks to maximize returns through optimal mix of spot and fixed charters Deliberately positioned itself toward more spot exposure at this stage of the cycle Look to maximize earnings through combining high-quality assets and directly employed crews in storage opportunities for both short term and long-term (FSO) contracts Fixed / Spot Exposure Fixed / Spot Exposure Fixed / Spot Exposure Fixed / Spot Exposure (Year end 2004) (Year end 2008) (Jan 2015) (September 2015) Fixed 18% 17% 20% 43% 57% 83% 82% Spot 80% Chartering strategy allows Euronav to capitalize on increasing rate environment 14
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